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The recently announced "First-Time Home Buyer Incentive" is a new way for government to stimulate demand for new housing and for mortgages, while representing the program as 'helping' young Canadians into the market.  Inducing young people into long-term debt obligations is not necessarily in their best interests. 

Under this program, the Canada Mortgage and Housing Corporation ('CMHC', a crown corporation) agrees to be a 'co-owner' of the qualifying property.  In addition, the borrower will have a CMHC insured high ratio mortgage, for which they pay a good fee.  In effect the buyer has to put up less savings to make the deal work.   

In economic terms, this kind of program brings new buyers into a market which puts upward pressure on prices.  This is one of the points made in a recent piece by Rita Trichur in the Globe.  Paradoxically, up price pressures are not benefiting new buyers who have limited debt servicing capacity. 

Additionally, the criteria for qualification may make the program irrelevant in the over-heated markets of Greater Vancouver and Toronto. The program criteria say household income may not exceed $120k, and the property value cannot exceed four-times that income (or $480k).  

Administratively, the program adds complications by introducing a new set of qualifications. In doing so it makes the process more cumbersome for a new buyer.  The program essentially reverses the constraints implemented in recent years on the mortgage insurance program which had required more direct investment by new home buyers, up to at least 10%.  Perhaps backtracking on the mortgage insurance front was viewed as politically unwise, so they've cloaked it. 

CMHC is still working out how this program will work.  However, it appears to be a pre-election gimmick more than a realistic housing program. It is unlikely to have significant beneficial impact in the cities with serious affordability problems. 

 

 

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Rent increases, renovictions, gentrification and unaffordability is a key issue we hear from those who have completed our member survey. CCEC is sponsoring Push at the 2019 DOXA Festival. The issue is not about gentrification, it’s a different kind of monster: Housing as a financial asset, a place to park money. The film looks at housing prices skyrocketing in cities worldwide. Longtime residents are pushed out. Not even nurses, policemen and firefighters can afford to live in the cities that they are supposed to protect. Push investigates why we can’t afford to live in our own cities anymore. Housing is a fundamental human right, a precondition to a safe and healthy life. But in cities all around the world having a place to live is becoming more and more difficult. Who are the players and what are the factors that make housing one of today’s most pressing world issues?  Click here to read more about the film. 

May 4 12:00nn Vancity Theatre: part of the Justice Forum and includes a post-film discussion.

May 10 6:00pm SFU

Buy Tickets here

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DOXA Film Festival

CCEC was proud to sponsor the recent screenings of Occupy the movie, at the DOXA Film Festival. The film provides a great perspective on the protests, the police response, the media coverage, and the analysis behind the actions. The Occupy Movement is still with us, and many of us with them. The issues that provoked mass protest remain as well - abuse of power and privilege, fraudulent leadership, unduly complex intercompany contracts, the transfer of wealth, and an absence of accountability. One message is worth repeating, "Un-Bank".

You may want to read Mother Jones piece on the Rating Agencies and the banking crisis of 2008.

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